Investments in agroforestry systems are growing along with the recognition that this model of farming is climate-friendly, environmentally sustainable, and profitable.
Recently the startup company Propagate Ventures raised $1.5 million in seed funding to help farmers in eight U.S. states transition from conventional agriculture to agroforestry.
For-profits ranging from individual farms to coffee companies and some of the largest chocolate companies in the world are currently investing in agroforestry.
The relatively longer wait until profitability complicates its adoption by investors and farmers alike, where quick returns and obligations to shareholders are normally required, underscoring the niche for companies like Propagate.

In the latter part of 2016, Ethan Steinberg and two of his friends planned a driving tour across the U.S. to interview farmers. Their goal was to solve a riddle that had been bothering each of them for some time. Why was it, they wondered, that American agriculture basically ignored trees?

This was no esoteric inquiry. According to a growing body of scientific research, incorporating trees into farmland benefits everything from soil health to crop production to the climate. Steinberg and his friends, Jeremy Kaufman and Harrison Greene, also suspected it might yield something else: money.

“We had noticed there was a lot of discussion and movement of capital into holistic grazing, no till, cover cropping,” Steinberg recalls, referencing some of the land- and climate-friendly agricultural practices that have been garnering environmental and business attention recently. “We thought, what about trees? That’s when a lightbulb went off.”

The trio created Propagate Ventures, a company that now offers farmers software-based economic analysis, on-the-ground project management, and investor financing to help add trees and tree crops to agricultural models. One of Propagate’s key goals, Steinberg explained, was to get capital from interested investors to the farmers who need it — something he saw as a longtime barrier to this sort of tree-based agriculture.

Propagate quickly started attracting attention. Over the past two years, the group, based in New York and Colorado has expanded into eight states, primarily in the Northeast and Mid-Atlantic, and is now working with 20 different farms. Last month, it announced that it had received $1.5 million in seed funding from Boston-based Neglected Climate Opportunities, a wholly owned subsidiary of the Jeremy and Hannelore Grantham Environmental Trust.
“My hope is that they can help farmers diversify their production systems and sequester carbon,” says Eric Smith, investment officer for the trust. “In a perfect world, we’d have 10 to 20 percent of U.S. land production in agroforestry.”

For the past few years, private sector interest in “sustainable” and “climate-friendly” efforts has skyrocketed. Haim Israel, Bank of America’s head of thematic investment, suggested at the World Economic Forum earlier this year that the climate solutions market could double from $1 trillion today to $2 trillion by 2025. Flows to sustainable funds in the U.S. have been increasing dramatically, setting records even amid the COVID-19 pandemic, according to the financial services firm Morningstar.

And while agriculture investment is only a small subset of these numbers, there are signs that investments in “regenerative agriculture,” practices that improve rather degrade than the earth, are also increasing rapidly. In a 2019 report, the Croatan Institute, a research institute based in Durham, North Carolina, found some $47.5 billion worth of investment assets in the U.S. with regenerative agriculture criteria.

“The capital landscape in the U.S. and globally is really shifting,” says David LeZaks, senior fellow at the Croatan Institute. “People are beginning to ask more questions about how their money is working for them as it relates to financial returns, or how it might be working against them in the creation of extractive economies, climate change or labor issues.”

Agroforestry, the ancient practice of incorporating trees into farming, is just one subset of regenerative agriculture, which itself is a subset of the much larger “ESG,” or Environmental, Social and Governance, investment world. But according to Smith and Steinberg, along with a small but growing number of financiers, entrepreneurs and company executives, it is one particularly ripe for investment.

Although relatively rare in the U.S., agroforestry is a widespread agricultural practice across the globe. Project Drawdown, a climate change mitigation think tank that ranks climate solutions, estimates that some 650 million hectares (1.6 billion acres) of land are currently in agroforestry systems; other groups put the number even higher. And the estimates for returns on those systems are also significant, according to proponents.

Read the whole article following the link above